RBA raises cash rate 50bps to 1.35%

By Sophia Rodrigues

The Reserve Bank of Australia has increased the cash rate target by 50bps to 1.35%, marking two consecutive 50-basis-point moves.

The rate increases are part of the steps the RBA is taking to normalize monetary conditions in response to higher inflation.

The RBA said global factors are accounting for much of the increase in inflation in Australia, but domestic factors are also playing a role.

"Strong demand, a tight labour market and capacity constraints in some sectors are contributing to the upward pressure on prices. The floods are also affecting some prices," it added.

The RBA reiterated that the size and timing of future interest rate increases will be guided by the incoming data and its assessment of the outlook for inflation and the labour market.

"The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time."